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Rising costs harm local exporters’ competitiveness
With export prices forced to hike due to skyrocketing input costs and lending rates, many Vietnamese exporters are losing competitiveness to their counterparts in neighboring countries.
The local manufacturers’ export contracts have slumped, and some firms even posted negative export growth rates in the first seven months of this year.
Dang Quoc Hung, Deputy Head of the Handicraft and Wood Industry Association of Ho Chi Minh City, said many importers have turned to other markets such as China, Taiwan and Malaysia, which provide more competitive prices than those of the domestic exporters, who had no choice but increase their prices due to soaring input costs.
The director of a wood exporter in Hoc Mon District said his company had failed to sign any new contracts since early this year as the importers always compare its prices with those of other countries. “They said our production cost is too high,” he lamented.
Similarly, Nguyen Thanh Hung, sales director of the fish sauce producer Hai Dang, said he had to hike the export price by VND5,000 a liter due to the 40 percent increase of material prices plus the exorbitant interest rates of 20 percent.
The hike immediately brought about negative impacts as we lost 50 percent of the export turnover to Japan, he said.
According to the General Customs of Vietnam, many exporters in the footwear, glassware, paper and pottery sectors have seen under-zero export growth last month.
The export turnover of the paper sector, for instance, dropped by 17 percent year-on-year, the customs authorities said.
Luu Quy Phuong, the spokesperson of the Saigon Paper JSC, attributed the high production cost to the increased material and labor costs and lending rates.
For its part, the plastic industry is also struggling to maintain a competitive price compared with other countries since they had to borrow bank loans at the interest rates of 22 percent a year to buy materials, which accounted for as many as 70 percent of the production cost.
Ho Duc Lam, deputy head of the Vietnam Plastic Association, said many businesses had to cut production and workforce due to the inflated lending rates, adding the high transporting cost in Vietnam was also causing difficulties to local exporters.
He said transport cost for a container in Vietnam is always higher by US$10 per ton of goods compared with the cost for the same weight and route length in other countries.
Moreover, the fuel surcharge for a 40-feet container has climbed to VND2.5 million ($125) from VND1.2 million ($60) since June, he added.
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